Business owners are always looking for ways to grow their business and reduce costs at the same time. One way to do that is to lease a car for your company’s use.
Being a business owner, you probably already know that leasing is an incredibly popular way to run company cars without worrying about paying for them later.
Not only are there no end-of-lease fees or buyback costs, but there’s also no down payment required. Instead, you pay only a small deposit and low monthly payments that go towards paying off your lease at the end of its term.
Below, we will discuss six more benefits of leasing a car for your business. Keep reading to learn more!
What Does Leasing a Car Mean?
Car leasing is a great option for those who don’t want to own a car. It’s similar to renting an apartment instead of buying a house, where you make monthly payments to drive the car for a set term.
The payment is often lower than the monthly cost of financing a purchase and you don’t take title to the vehicle or build equity. When the lease term is up, you can either return the car or buy it outright.
When leasing a car, you’ll need to consider factors such as mileage limits, fees for going over your limit, and end-of-lease costs. You should also be aware of any additional charges that may apply in order to avoid any surprises at the end of your lease.
But overall, leasing can be an affordable way to drive a new car without having to commit to ownership.
With so many options available from different dealerships and manufacturers, just make sure to do your research before making a decision. You can also click here to learn more about car leasing and how it’s different from a hire purchase.
6 Benefits of Leasing a Car for Your Business
1. No Need for a Large Capital
When you lease a vehicle, you don’t have to pay its full cost upfront. Instead, you’ll make monthly payments over a set period.
This means that even if your business is having trouble making ends meet, you can still lease a car without having to worry about saving up enough money upfront.
Moreover, low lease payments help businesses easily budget their costs and keep their employees happy with new vehicles every few years.
2. No Maintenance Cost
Another great benefit of leasing is that you don’t have to worry about paying for maintenance on the vehicle since it’s covered under the lease agreement.
This is especially beneficial for small businesses that they may not have extra funds lying around for unexpected expenses.
If something breaks down on your leased vehicle, simply call up your dealership or contact them online, and they will take care of everything from there.
3. Frequent Upgrades to Newer Models
When you lease a car, it’s easy to upgrade to newer models more frequently. This is particularly appealing for those who love the latest and greatest tech and want to be on the cutting edge of innovation.
The problem with buying a new car is that it will lose its value very quickly, making it difficult to sell or trade it in for something more up-to-date.
Leasing, on the other hand, allows you to stay up-to-date in terms of car tech without having to worry about whether or not your car will be worth much when it comes time for an upgrade.
Instead, when your lease expires, you can simply return the vehicle in good condition and get one of equal value or better as part of your lease agreement.
4. Tax Advantages
Leasing a vehicle can help you reduce your taxable income. Here, business owners have two options: deducting the actual expenses or the standard mileage rate. You can use whichever method provides you with the larger deduction.
Here’s how these methods work:
- Standard Mileage Rate: IRS allows business owners to deduct the standard mileage rate for business miles driven using the standard rate method. However, it should be started in the first year when the car is available to your company. The standard mileage rate was 58.5 cents per mile in 2022, but increased to 62.5 cents per mile in the last six months of 2022.
- Actual Cost Method: The actual cost method involves keeping track of all your business-related automobile expenses and deducting them from your taxable income at the end of each year.
5. Better Business Image
Depending on your business type, your car’s appearance can be one of the first things people notice about your company. And that impression can make or break the first interaction they have with you.
You will be able to make a positive impression on your clients and customers when they see a new car waiting for them at the office or when they think back on their experience with your company.
In addition, a well-kept car will allow you to present yourself in a professional manner while driving around town—which can be especially important if you’re looking for clients after registering a new business or trying to build relationships with existing ones.
Leasing cars can allow you to keep your fleet looking new without having to spend money on buying cars that will depreciate in value over time.
6. Option to Purchase the Car at the End of the Lease Term
This is called a buyout provision, which allows you to purchase the car at a predetermined price when your lease term ends. This can be helpful if you have stumbled across a particularly good vehicle that you would like to keep for longer.
On the other hand, if you choose not to buy out your vehicle when the lease ends, your car will be returned to the dealer. And any remaining payments will be due immediately.
Final Words
So, there’s no doubt that leasing is a great financing option for businesses looking to keep their fleets fresh.
But at the same time, you should consider all other options available for getting a car.
An ideal option for one business might be a poor choice for another, so evaluate your options and choose the one that will help you achieve your goals for business growth.
Good luck!
